Debt Advice: When Should You Choose Cash?Dec 08, 2016
More and more Canadians are going cash-free. A recent poll reveals that 77 per cent of Canadians prefer to pay by debit and credit, with 65 per cent rarely using cash to pay for goods and services. This trend is expected to continue. The majority of Canadians expect their use of digital payment technologies to increase by the year 2020. There’s no doubt that options like mobile payment apps, tap-enabled credit cards and RFID bracelets are quick and convenient, but there may still be times when using cash is a better option, particularly when it comes to keeping control of your debt. Here is some sound advice on when it’s a good idea to choose to use cash:
1.) When making a smaller purchase
Although digital payments are easy and convenient, it may be a good idea to switch to cash when making smaller purchases, like your morning coffee. Why? Unlike digital payments, research shows that paying with cash tends to illicit a stronger feeling of parting with your money. Using bills and coins make you mindful of your spending — a feeling that isn’t always there when you tap your credit card or smartphone. Also, multiple small digital purchases can make it challenging to track your spending and keep your debt under control.
2.) When you are worried about your information
Although most digital payment options are secure, there may be times when your information is compromised. In fact, this is a concern for many Canadians — over half are concerned about the safety of their personal information when using digital payment technology. If you find yourself in a situation where you feel unsure about your cyber security, it’s a good idea to put the plastic away and make your payment in cash.
3.) When you are concerned about the amount of debt you currently carry
If you, like many Ontarians, are worried about how much debt you carry, think about going cash-only for a period of time. Try to stick to cash and avoid credit, debt and other digital payment forms for three to six months. Doing so will make it easier to track and limit your spending, as well as engage in mindful spending behaviours that can help you avoid adding to your current debt load.
Beyond sticking to cash, there are other steps you can take if you are feeling overwhelmed by the debts you carry. Start by researching the debt options available to you, such as debt consolidation or filing a consumer proposal. There are many helpful online resources, such as the Financial Consumer Agency of Canada website, that contain valuable tips and information.
If you are unsure of which option is best or have further questions, the next step is to seek professional debt advice. A debt relief professional, like a Licensed Insolvency Trustee (LIT), can provide you with information regarding the ways to reduce debt and relieve some of the stress you are feeling.
Going cash-only when the rest of the world is embracing digital technology might not be easy advice to follow. But for those Canadians who want to gain control over their debt, it could be the best course of action. Consider giving it a try for three to six months and see if it has a positive effect on your finances.
When do you choose cash over credit in order to control your debt? Join the conversation and share your ideas and debt advice with BDO Pembroke using the hashtag #BDODebtRelief.